Coverage Pointers - Volume XIX, No. 5

Volume XIX, No. 5 (No. 488)

Friday, August 25, 2017

A Biweekly Electronic Newsletter


Hurwitz & Fine, P.C.

1300 Liberty Building

Buffalo, NY 14202

Phone: 716-849-8900

Fax: 716-855-0874


Long Island Office:

535 Broad Hollow

Melville, New York 11747

Phone: 631-465-0700

Fax: 631-465-0313

© Hurwitz & Fine, P. C. 2017
All rights reserved

As a public service, Hurwitz & Fine, P.C. is pleased to present its biweekly newsletter, providing summaries of and access to the latest insurance law decisions from the New York State appellate courts.  The primary purpose of this newsletter is to provide timely educational information and commentary for our clients and subscribers. 


In some jurisdictions, newsletters such as this may be considered Attorney Advertising.


If you know of others who may wish to subscribe to this free publication, or if you wish to discontinue your subscription, please advise Dan D. Kohane at [email protected] or call 716-849-8900.


You will find back issues of Coverage Pointers on the firm website listed above.


 Dear Coverage Pointers Subscribers:


Do you have a situation?  Most who call us, start out by telling us just that. As so many of you have heard so many times, we love situations. 


We send a special welcome to the bevy (passel?) of new subscribers, a number of whom were referred by Bill Wilson (more below).  So you know, you are reading our “cover letter” with the actual issue of Coverage Pointers attached.  We publish it in Word format so you can cut and paste it into your claims file or share the summaries with colleagues.  Past issues (we are in our 18th year of publication) can be found on our website,  Just click on the NEWSLETTER tab.  We publish every second Friday.


You will find a mix of insurance decisions and the ever-popular One Hundred Years Ago Today offering in our cover letter.  If you prefer to avoid the history, go right to the all business issue, attached.


If you love CP, and why wouldn’t you (ha), you will enjoy our sister publications, Labor Law Pointers (edited by Dave Adams – [email protected]) and Premises Law Pointers (edited by Jody Briandi – [email protected]). Just drop them a note and Dave and Jody would be pleased to add you to their monthly publications.


The summer is moving along too quickly.  That does not make your editor happy.  Just want you to know.


The courts are quieter and we won’t have a great number of appellate decisions until the end of September.  We give you what we can.


Thanks to Bill Wilson, Property and Casualty Insurance Commentary:


We appreciated the kind review of our newsletter, provided by Bill Wilson, founder at Bill’s blog is surely a must-read.  Bill is the founder and director of Big “I” Virtual University and Retired Assoc. VP of Education and Research from IIABA, the Independent Insurance Agents & Brokers of America. He kindly commented that he only “religiously reads three attorney publications,” one of which is ours:


Combining whimsy with historical information, Dan Kohane’s monthly newsletter is full of important legal decisions from around the country. I can’t remember an issue in years that didn’t have at least one, and usually several, cases that would be of benefit to agents, underwriters, adjusters, risk managers, and other industry professionals.


Kudos as well to Randy Maniloff’s Coverage Opinions and Cris Burand’s Insurance Agency Advisor.


Editor’s Note:  I like whimsy, indeed.  The publication is the fine work of a team of great lawyers who love what they do.

Potenza Gets the Lead Out:


Huge congrats to our toxic torts guru Chris Potenza who obtained a defense verdict in Albany County in a lead paint exposure case.  Now I don’t know much about lead paint, but plaintiff apparently had a lead level of 38 while residing at the insured’s property.  I’m told that’s pretty high.  Nice work.  And kudos to our friends at New York Central Mutual for having faith in their insured (and their defense counsel) and the gumption to try this case despite the significant risk of a high damages verdict. 


Post-Burlington Strategies – It’s Time for that Roundtable:


The chatter around every risk-transfer water cooler in New York is the Burlington decisionFor those who missed it – and there aren’t many risk-transfer/additional insured aficionados who have, on June 6, New York’s highest court, the Court of Appeals ruled that the term “caused by” in blanket additional insured endorsements means “proximately caused by”.  It is narrower than “arising out of”, contrary to previous Appellate Division rulings finding that the terms were practically synonymous.  If you didn’t see our summary of the ruling –in a special issue of Coverage Pointers – issued almost immediately after the decision was released, here is a link to that publication.


We have the first post-Burlington decision reported in Jen’s column today (and an interesting follow-up decision in the actual Burlington case reported in my column).


There are a number of issues left unresolved by Burlington including whether the term “acts or omissions” requires a finding of negligence, whether “in whole or in part” limits AI coverage to derivative liability, how the decision impacts on the duty to defend (which is likely governed by BP Air), and most importantly, WHAT NOW?


For example, have you considered:


  1. How will Burlington guide your response to the next tender you receive asking for additional insured coverage?

  2. How does Burlington impact on decisions made last month or last year, where you have agreed to provide additional insured coverage because the plaintiff was an employee of the named insured (but the named insured did nothing to cause the accident)?

  3. How will the issue of proximate case be resolved, particularly in cases where your named insured is the subcontractor but you have assumed the defense of the owner or general contractor and discontinued the third party action?


The Hurwitz & Fine, P.C. coverage team is here to help sort out strategies.  We’ve already been peppered with questions (yes, situations) and have participated in roundtables with decision makers up and down the line.


Whenever you’re ready to talk about this, let’s set up a time to chat.


It’s Nice to be Recognized – We Only do this Once a Year:


Our regular and loyal readers know that this newsletter does not spend time trying to convince you that we’re the best thing since crunchy peanut butter, sliced bread or the Echo Dot (although Alexa and I are striking up a nice relationship).  However, once a year Best Lawyers in America and Super Lawyers, two peer selected publications, publish their award announcements.  We are proud of our lawyers, and forgive me if I thank the lawyers who were kind enough to cast a nod in our direction:


Evanko Named Best Lawyer in Employment, 10 Named to Best Lawyers List:


Hurwitz & Fine, P.C. firm attorneys have been recognized by the extremely selective 2018 Best Lawyers in America with 10 lawyers recognized in various areas of law and Hurwitz & Fine, P.C. president Ann Evanko was named Lawyer of the Year in Employment Law. 


  • Patrick B. Curran (Personal Injury Litigation – Defendants)

  • Ann E. Evanko (Best Lawyers 2018 Buffalo Employment Law - Management "Lawyer of the Year," Corporate Law, Employment Law – Management, Litigation - Labor and Employment, Mediation)

  • Robert P. Fine (Corporate Law, Health Care Law, Mergers and Acquisitions Law, Tax Law, Trusts and Estates)

  • Lawrence C. Franco (Corporate Law, Tax Law, Trusts and Estates)

  • Dan D. Kohane (Commercial Litigation, Insurance Law, Litigation – Insurance)

  • Michael F. Perley (Litigation - Municipal, Personal Injury Litigation – Defendants)

  • Edward C. Robinson (Elder Law)

  • Lawrence M. Ross (Corporate Law, Health Care Law, Tax Law)

  • Roger L. Ross (Real Estate Law)

  • Andrea Schillaci (Product Liability Litigation – Defendants)


Congratulations to all of the attorneys honored!


Perley Named To Top 10, 26 Listed In New York Super Lawyers:


Hurwitz & Fine, P.C. is honored to have over 70% of the firm’s attorneys named to the New York Super Lawyers list (Upstate Edition), with several attorneys being prominently featured in the Top 10, Top 50 and Top 25 Women lists. Only 5% of eligible attorneys statewide make the list. The 2017 New York Super Lawyers list includes:


  • David R. Adams, Construction Litigation

  • Diane F. Bosse, Insurance Coverage

  • Jody E. Briandi, Personal Injury Defense: General (Top 50/Top 25 Women)

  • Todd C. Bushway, Personal Injury Defense: General

  • Earl K. Cantwell, Business Litigation

  • Patrick B. Curran, Personal Injury: Medical Malpractice

  • Ann E. Evanko, Employment & Labor (Top 25 Women)

  • Robert P. Fine, Business/Corporate

  • Edward B. Flink, Personal Injury Defense: General

  • Lawrence C. Franco, Business/Corporate

  • Dan D. Kohane, Insurance Coverage (Top 50)

  • Steven E. Peiper, Insurance Coverage

  • Michael F. Perley, Personal Injury Defense: General (Top 10/Top 50)

  • V. Christopher Potenza, Personal Injury Defense: General

  • Edward C. Robinson, Estate & Probate

  • Lawrence M. Ross, Health Care

  • Roger L. Ross, Real Estate

  • Andrea Schillaci, Business Litigation (Top 50/Top 25 Women)

  • Kevin J. Zanner, Business/Corporate


Rising Stars:


  • Jennifer A. Ehman, Insurance Coverage

  • Patricia A. Fay, Personal Injury Defense: General

  • James L. Maswick, Personal Injury Defense: General

  • Marc A. Schulz, Personal Injury Defense: General

  • Tessa R. Scott, Personal Injury Defense: General

  • Amber E. Storr, Business Litigation

  • Agnieszka A. Wilewicz, Insurance Coverage


We salute all of the attorneys recognized and thank our peers in the legal community for nominating us for this honor.


Off the Mark:


Dear Readers,

Now that the search for solar eclipse glasses is over and Labor Day is just around the corner, I’m looking forward to cooler weather and football.  Tomorrow my family and I are taking a trip down to South Carolina for a late summer vacation before school starts.  My kids are very excited about the trip and have already packed their favorite toys.  Hopefully, they behave in the car.


It seems the courts, or maybe the attorneys, have taken a vacation from construction defect cases as my search for interesting case law on the topic revealed a lack of activity.  As I’m sure there are more construction defect cases to come once summer comes to an end, I will continue to keep an eye out for noteworthy decisions. 


Happy early Labor Day everyone! 


Until next time …



Brian F. Mark
[email protected]


Bad Drivers, 100 Years Ago:


Middletown Times-Press

Middletown, New York

25 Aug 1917





An agent for an insurance company, while at Roscoe, Sullivan County, this past week, informed a resident of this city that since the first of April his company had been called upon to adjust losses to 515 machines, the amounts allowed being all the way from $10 to hundreds each.  “When it is considered that our company only insures about one-tenth of the machines, some idea can be obtained of the reckless driving of cars,” commented the agent.


Jen’s Gems:




I spent the last few evenings ordering the remaining items Ella needs to start kindergarten in two weeks (tear).  I ordered her school uniform, supplies and some new shoes.  I was telling my husband how I am probably going to cry like a baby on her first day of school.  In a way only husbands can, he responded “she goes to daycare every day.  How is it any different?”   Sigh, they just don’t understand. 


In terms of my column this week, we report on a must read for New York practitioners.  Ryan Maxwell, a law clerk from our office, was kind enough to draft up the summary.  What makes this decision a must read is that it is the first post-Burlington decision, we have seen.  Again, Burlington v. NYC Transit Authority, is a Court of Appeals (our highest court) decision issued in June which discussed the appropriate interpretation of the “caused by” acts or omissions language in certain AI endorsements.  What the Court of Appeals said in that decision was that “caused by” is not equivalent to “arising out of,” but instead looks to the proximate cause of the loss.  This decision we report on today examines the court’s struggle to figure out what that means specifically with regard to the duty to defend and what is the impact of this change in case law.  The case is a declaratory judgment action brought by the employer’s CGL insurer.  Under pre-Burlington case law, employment of the injured plaintiff alone was essentially sufficient to trigger a defense obligation.  So, what is the impact?  A review of the decision reveals not much.  The decision, citing Regal Construction Corporation, an earlier Court of Appeals case, found that “[w]hen an employee of the named insured is injured while in the employ of the named insured, the additional insured is entitled to defense because there is a reasonable possibility that the bodily injury is proximately caused by the named insured’s acts or omissions.”  Thus, based on the facts considered (i.e., the employee’s status), the court found a defense was triggered.  We will see if other counties follow suit or if this decision is simply New York County (who led the charge on the earlier case law), reluctant to accept the Court of Appeals decision. 


Also, I wanted to remind everyone if you are planning on attending DRI’s Annual Meeting this year, October 4-8 at the Sheraton Grand Chicago Hotel, early registration ends September 6th.  After that date, the registration fee goes up $200.00.  So, if you are planning on attending, go to the DRI website, login and register today.


Until next issue…



Jennifer A. Ehman

[email protected]


Soldier Insurance – A Century Ago:


The Brooklyn Daily Eagle

Brooklyn, New York

25 Aug 1917




Some of the large casualty companies have decided not to pay indemnities in the cases of men who are disabled or become ill while in service abroad.  One of the largest casualty companies, with its home office in this city, will continue to pay insurance covering any accident which may happen to the men while in this country.  This includes even the contingency of an enemy attack.  It, however, will not pay insurance from the moment soldiers or sailors holding its policies leave for duty in a foreign land.


Another company with a local home office has taken substantially the same ground.  The companies will also refuse to issue new insurance to such as may apply for it.  This action has been taken because the companies lack experience on which to base rates for the Army and Navy in war.  That part of the premium applicable to the rest of the policy term will be refunded.


Tessa’s Tutelage:


Dear Readers:


From time to time I notice that courts will decide a whole block of cases concerning the same legal issue.  Usually the court’s decisions all say something to the effect of “for the reasons stated in ‘XYZ’ case, we decide the same way.” Usually, with my luck, it is an unreported case I can’t locate.  This month there are at SO MANY cases which point to the same case as the basis for their decision. For once, I was able to find it! Woot!


Now, don’t get too excited … the much cited decision at issue didn’t alter the landscape of the no-fault world.  Basically, in that case the Court determined that summary judgment was not appropriate where there was a question of fact concerning Plaintiff’s mailing of the requested verification documents.  This isn’t really groundbreaking – however, based on the sheer number of cases that have been decided concerning this issue in the last 30 days – I guess people really needed a reminder.


Nonetheless, I hope everyone is enjoying their last few days of August with friends and family!


My best,



Tessa R. Scott

[email protected]


German Title Thrown Overboard During WW I:                     


Democrat and Chronicle

Rochester, New York

25 Aug 1917


Drop “German” from Name.


Directors of the Buffalo German Insurance Company have voted to drop the word “German” from the name of the company.  If the Supreme Court authorizes the change the company will be known as the Buffalo Insurance Company.  The change is made because of war conditions. 


Ewell's Universe:


Dear Subscribers:


There is something almost magical about a solar eclipse. On an ordinary day, most people are only concerned with whether it is sunny or raining. When a solar eclipse occurs, the sun and moon instantly become a novel fixation.


Apparently, solar eclipses have been quite the awe-inspiring phenomenon for centuries. According to an ancient Greek historian, in the sixth century two warring nations were in the midst of battle when suddenly a total solar eclipse occurred. The day was turned to night. Perhaps they feared the world was ending, the two nations— the Medes and Lydians— stopping fighting and negotiated a peace treaty. Herodotus, The Histories, 1.74.2 -.4. Today, this epic battle is called the “Battle of the Eclipse.”  The History Channel offers more details on the “Battle of the Eclipse”, should you have an interest.


This week’s solar eclipse has not eclipsed our coverage of our nation’s high courts and their decisions on insurance law and insurance-related issues. Here’s a puzzle for you. Where an insurance company releases any and all claims, causes of action, suits, damages and judgments, does the carrier also waive its right to restitution? That is precisely the question that Vermont’s five Supreme Court Justices “considered.”


Randall Blake (and a friend) burned his house down and then filed an insurance claim. The insurance carrier made payments pursuant to the homeowners’ policy it had issued until it discovered that Blake committed arson. A civil action ensued, in which Blake sued for additional insurance payments and the carrier counterclaimed. While the civil action was pending, Blake was convicted of arson to defraud an insurer. The parties resolved the civil suit by exchanging mutual releases. Several years later the Attorney General of the State of Vermont pursued a restitution claim against Blake.


Vermont, like the vast majority of states, has a statute affording restitution to victims of a crime. Vermont’s restitution statute requires courts to “consider” whether restitution should be awarded to the victim. All parties agreed that the carrier was the victim of Blake’s arson and fraudulent insurance claim. However, did the carrier’s release waive the carrier’s right to restitution?


In order to determine the answer, the court necessarily “considered” what it means to “consider.” In their endeavor, they first “considered” how the dictionary defined the term. The dictionary urged that they “do more than give some thought to the matter”. Alas, that did not help their inquiry. The Court then looked to the intent behind the restitution statute. After some “consideration” the Court determined that “consider” within the context of the statute meant that “where restitution is necessary, the court must impose restitution.”


Turning to the releases, the Vermont Supreme Court determined that the carrier could not waive its right to restitution. As such, the release signed by the carrier in the civil action did not prevent the insured from being ordered to pay restitution in the related criminal proceeding. One might say that the release was “eclipsed” by the legal right to restitution. Should you wish to further explore the court’s “considerations”, the case is “considered” in depth in the attached issue.


The vast majority of states have similar restitution statutes. Given the underlying purposes of restitution, in a majority of states releases executed in a civil action will not bar an order of restitution. While this is good news for insurance carriers, whether the insured can actually pay back the money is a separate issue. I would not hold my breath that the check is in the mail.


‘Til Next Time,



John R. Ewell

[email protected]


Peiper’s Peaches;


I can see it.  The unmistakable depression that starts to hit my house, as well as many of yours, around this time.  Nope, it is not the end of summer.  I, myself, am more of a Fall/Winter person anyway…rather ski on snow than water. 


Nope, the depression of which I speak only befalls from 8 to 18 (and those who teach children, I suppose).  After months of field trips, ice cream parties and pool days at Summer Camp, school is a mere 10 days away.  For those of you further south, this phenomenon has already past I trust.  By the time I join you next issue, the sweet blissful return of routine will be upon us.  Parents rejoice.


Actually, in all honesty, my children have been great this summer.  Even the past few days where they fell within the gap between Summer Camp and School, it has been quite pleasant. Of course, it is helped that my daughter arose promptly this morning at 11:45.  The French toast prepared by yours truly had long gone cold, but she didn’t seem to mind swapping breakfast for brunch. 


I haven’t much to report by way of case law this week; another column falling victim of a slow docket.  So, with nothing else, to write about, I simply point out that today is National Peach Day.  So eat a peach for peace, and enjoy the penultimate week of summer.  Missed buses and lost homework are right around the corner.


P.S. – If you got the peaches for peace reference, I’ll stop wasting time.  Cheers.





Steven E. Peiper

[email protected]


Fleeting Senatorial Courtesy – Even 100 Years Ago:


The Buffalo Commercial

Buffalo, New York 

25 Aug 1917




            “Father,” said the small boy, “what is senatorial courtesy?”

            “I am not exactly clear on that point, my son.  But it seems to be some sort of arrangement that permits a senator to be as inconsiderate as he chooses.” – Washington Star.


Hewitt’s Highlights: 


Dear Subscribers:


Greetings from Pennsylvania. I am on vacation with the family. We have hit Sesame Place and are now staying on a Farm bed and breakfast. The kids are loving the animals and doing chores like milking cows and feeding goats and collecting farm fresh eggs. Before we head back to Long Island, we plan on hitting Hershey where I will, no doubt, eat too much chocolate. As I type this, the boys are sleeping in bunk beds in our room at the farm, dreaming of Pony Rides. School starts in 13 days now, so their summer is coming to an end. But they thoroughly enjoyed the recent Eclipse, a well-covered news event that brought us together as a nation for once as we all looked up to the sky (hopefully with legitimate solar glasses) to see a phenomenon bigger than ourselves. 


On the serious injury front, the cases are sparse. One case never reached the merits at all, as plaintiff’s counsel failed to submit opposition papers and the court rejected their claims of law office failure. In another case, defendant’s own expert found range of motion limitations and never provided any basis for his belief that the limitations were self-imposed.


Until next time,


Robert Hewitt

[email protected]


No Uniforms for Postmen:


The Buffalo Commercial

Buffalo, New York 

25 Aug 1917





Washington, Aug. 25.—Acting on reports that letter carriers at a certain place have been wearing hats similar to those prescribed for use by the army the post office department today issued an order forbidding the wearing of a uniform by employees of the service any part of which is similar to a distinctive part of that prescribed for the army, navy or marine corps.


Wilewicz’ Wide-World of Coverage:


Dear Readers,


This past week, over the span of eight days, my family drove a total of 1,939 miles, entered and explored 10 National Parks, and passed through no fewer than six States (Colorado, Wyoming, South Dakota, Montana, Idaho, and Utah, in that order, and back to Colorado). Let’s just say that my family is done with any moderate- to long-distance driving for the foreseeable future.


Now, did everyone get to catch the Great American Eclipse, even momentarily or partially? We viewed it from Jackson Hole/Teton Village in Wyoming. It was a spectacular spectacular. We were right in the path of totality and the conditions could not have been better. The sky was clear and cloudless, and the weather warm. That is, until the moon started to blot out the sun. During totality, we noticed a considerable drop in temperature (perhaps as much as 10-20 degrees?), which necessitated putting on jackets. The surroundings gradually turned darker until the critical moment when everything was tinted a greyish blue, not quite like dusk nor dawn. It lasted nearly three minutes. On the ground near us we noticed that the air seemed to gyrate, perhaps since only the wavy light from outside the umbra was coming through. We also noticed that the shadows of the tree leaves were cast on the ground in the shape of the crescent sun, acting sort of like thousands of pinhole cameras on the pavement. All in all, it was worth the trek.


In other news, amidst that whirlwind tour of the mid-west, the Second Circuit was mercifully quiet. Thus, the Wide World of Coverage has nothing to report on this week, apart from your columnist’s ventures into our wide country. I must say, one never has a real appreciation for how vast or wide a state like Wyoming is until one drives its entire perimeter. From Denver to Mount Rushmore, to Devil’s Tower, Yellowstone, Grand Teton, and back through the Rockies, we all have a newfound understanding of this county’s greatness and expanse.


Until next time, do enjoy what’s left of this summer. Winter is coming.



Agnes A. Wilewicz

[email protected]


Pro-German Support Unpopular:


The Oneonta Star

Oneonta, New York

25 Aug 1917




Colonel Reichman Just as Anxious to

Win War as Any American


Washington, D.C., Aug. 24.—Colonel Carl Reichman, whose nomination as brigadier general had been held up by the senate, specifically denied that he had ever said the army draft law would be so unpopular as to cause civil war or that German submarine warfare was justified under international law and that draft army members should not be sent to France.


The colonel said he believed from both a military and a personal standpoint, troops should be sent to France and that neither his German parentage nor the resident to two of his sisters in Germany would have any effect on his conduct on the warfront.


He was anxious to win the war as much as any other American.


Barnas on Bad Faith:


Hello again:


Summer is coming to an end, and we have been experiencing some fall-like weather here in Buffalo the last couple of days.  I’m heading to Boston for a nice long weekend with my girlfriend and friends.  On my last trip to Boston I didn’t get much time to explore.  This weekend we have all the essentials lined up: whale watching, Sam Adams, and, of course, a trip to Fenway Park.  I don’t know why it has taken someone who loves baseball as much as I do so long to get to Fenway Park, but this will be my first ever trip to Yawkey Way.  Better late than never I suppose.


I have two cases in my column this week, but I would recommend focusing on the Dziadek case from the Eighth Circuit.  There, the court concludes that Charter Oak deceived its insured and her attorney into believing that they did not have what amounted to $900,000.00 in UIM coverage under the policy.  According to the court, Charter failed to provide plaintiff’s attorney with a complete copy of the policy despite multiple requests and provided only excerpts that did not reveal her status as an insured.  The Court also affirmed a $2.75 million punitive damages award.  This case is interesting and slightly different as the jury found that Charter committed the tort of deceit (South Dakota Law) rather than bad faith.  Ultimately the court concluded that the jury below reasonably could have concluded that Charter Oak willfully misled the plaintiff about the existence of UIM coverage with the intent to avoid having to pay the $900,000.


Enjoy the big Mayweather-McGregor fight this weekend and the Game of Thrones finale!  Valar Morghulis.


Signing off,



Brian D. Barnas

[email protected]


Race Relations a Challenge, 100 Years Ago:


The New York Times

New York, New York

25 Aug 1917


Texans Protest to President

Against Negro Soldiers in South


Riots at Houston Raise Entire Problem as to the

Quartering and Training of Colored Troops—Baker Awaits

Full Report from General Parker before Taking Formal Action.


Special to The New York Times


WASHINGTON, Aug. 24.—The race question in the formation of the armies that are to fight Germany has been brought forcibly to the attention of the Government by the clash at Houston, Texas, between members of the Twenty-fourth United States Infantry, a Negro regiment, and police and civilians, in which there were at least seventeen fatalities.


Some Southern Senators and Representatives contend that this tragedy makes it incumbent upon the Administration to give heed to the protests that have come from the South over the quartering of Negro soldiers in Southern States.  Generally the Southern representation in Congress refrained during the consideration of the selective draft legislation from bringing up the matter of drafting Negroes into the national army for fear of embarrassing the Administration in its effort to have the law enacted.  Since the draft law has been effective, however, there have been indications of opposition in some sections to having Negro troops quartered in the South, and this sentiment was beginning to take form when the Houston riots came to make it a live issue. 


Altman’s Administrative (and Legislative) Agenda:  


Greetings, Dear Readers: 


While my colleagues will no doubt write about Labor Day weekends with their husbands or wives, or Back to School shopping with their children, I, your designated single author, turn my thoughts to the Hades of online dating. Online dating is like a gas station buffet, dear readers: hundreds of options, all of which will have you visiting a doctor post haste.


And while we’re on the subject of health, New York’s Department of Financial Services issued a Circular Letter on August 12, 2017, seeking to dissuade health and accident insurers from discriminating against transgender individuals when processing claims.  The Letter seeks to discourage carriers from denying a claim if a policy holder’s gender identification does not match the gender typically identified with a given claim.



Howard B. Altman

[email protected]


Highlights from This Week’s Issue (attached):


Dan D. Kohane
[email protected]


  • Insured may be Required to Contribute to Long Tail Defense Costs for Uninsured Periods.  Insurers, Defending Claims for 20 Years, Avoided Waiver by Claiming Right to Contribution

  • Burlington II – Burlington Can Recover the Money Paid in Settlement of the Underlying Claim, Despite Several Arguments in Opposition

  • Carrier Fails to Demonstrate a Lack of Cooperation on the Part of Its Insured, Failing to Justify Disclaimer



Robert E.B. Hewitt III

[email protected]


  • Plaintiff Raised an Issue of Fact Fulfilling Its Burden Once Defendant Demonstrated a Prima Facie Entitlement to Summary Judgment

  • Plaintiff’s Counsel’s Law Office Failure to Submit Opposition Papers Deemed Insufficient Excuse by Appellate Division

  • Defendant’s Own Expert Found Unexplained Range of Motion Limitations



Tessa R. Scott

[email protected]




  • Where there is Evidence that Plaintiff had Mailed the Requested Verification, Summary Judgment was not Appropriate

  • It Goes Without Saying that Parties Must Comply with Discovery Rules and Orders of the Court



Steven E. Peiper

[email protected]


  • Motion for Corporate Default Fails were CPLR 3215(g)’s Subsequent Service Requirement is not Satisfied



Agnes A. Wilewicz

[email protected]


  • All’s quiet on the Second Circuit front.



Jennifer A. Ehman

[email protected]


  • New York County Trial Court holds that Despite the Recent Court of Appeals Decision, Burlington Insurance Company v. NYC Transit Authority, an Insurer is Still Obligated to Defend Where There is a “Reasonable Possibility” of Coverage for the Named Insured’s Acts or Omission



Brian D. Barnas

[email protected]


  • First Party Bad Faith Claim Survives Summary Judgment after Breach of Contract Claim was Reinstated

  • Insurer that Failed to Advise the Injured Plaintiff of Underinsured Coverage was found to have Committed Deceit and had to Pay $2.75 Million in Punitive Damages


John R. Ewell

[email protected]


  • Release Signed by Insurer in the Civil Action Did Not Preclude Court from Ordering Insured to Pay Restitution to His Insurer in Related Criminal Proceeding



Howard B. Altman

[email protected]


  • Circular Letter: Anti-Discrimination -- Transgender


Brian F. Mark
[email protected]


  • No cases to report.



Earl K. Cantwell
[email protected]


  • Debt Buyers are not “Debt Collectors” under the FDCPA



That’s about all we have.  Hope to see some of you at the PLRB Regional Claims Conference in New Orleans, September 6 and 7.





Dan D. Kohane

Hurwitz & Fine, P.C.


1300 Liberty Building

Buffalo, NY 14202


Office:            716.849.8942

Mobile:           716.445.2258

Fax:                716.855.0874

E-Mail:            [email protected]  


Twitter:           @kohane




Hurwitz & Fine, P.C. is a full-service law firm
providing legal services throughout the State of New York

Dan D. Kohane
[email protected]



Agnes A. Wilewicz

[email protected]



Jennifer A. Ehman

[email protected]


Dan D. Kohane, Chair
[email protected]


Steven E. Peiper, Co-Chair

[email protected]

Michael F. Perley

Jennifer A. Ehman

Agnieszka A. Wilewicz

Edward B. Flink

Patricia A. Fay

Brian D. Barnas

Howard B. Altman

Brian F. Mark

John R. Ewell

Diane F. Bosse

Joel R. Appelbaum


Steven E. Peiper, Team Leader
[email protected]


Michael F. Perley

Robert E. Hewitt, III

Brian D. Barnas


Jennifer A. Ehman, Team Leader
[email protected]

Patricia A. Fay


Jody E. Briandi, Team Leader
[email protected]


Diane F. Bosse

Topical Index

Kohane’s Coverage Corner

Hewitt’s Highlights on Serious Injury

Tessa’s Tutelage
Peiper on Property and Potpourri

Wilewicz’s Wide World of Coverage

Jen’s Gems

Barnas on Bad Faith
Ewell’s Universe

Altman’s Administrative (and Legislative) Agenda
Off the Mark

Earl’s Pearls


Dan D. Kohane
[email protected]


08/23/17       North River Insurance Company v. Duro Dyne National Corp.

Appellate Division, Second Department

Insured may be Required to Contribute to Long Tail Defense Costs for Uninsured Periods.  Insurers, Defending Claims for 20 Years, Avoided Waiver by Claiming Right to Contribution
Duro Dyne was named in hundreds of lawsuits throughout the United States in which the plaintiffs seek to recover damages for injuries allegedly sustained as a result of exposure to asbestos contained in products manufactured and/or distributed by Duro from the 1950s through the 1970s (“underlying lawsuits”). North River), issued several primary insurance policies and umbrella excess liability policies to Duro and commenced this action to determine its obligation defend and/or indemnify the Duro in underlying lawsuits.


Duro sought a determination that it the North River policy did not include an endorsement excluding asbestos-related liability. Duro’s president, submitted an affidavit in support of the motion, but did not state that he possessed personal knowledge of the facts recited therein. He did not state that he had any first-hand knowledge of what transpired during the time the asbestos exclusion was purportedly added to the policy or that he even worked for the Duro defendants when the circumstances referred to in his affidavit occurred. Therefore, his affidavit was insufficient to demonstrate the absence of any triable issues of fact with respect to whether the asbestos exclusion was properly added to the policy.


The Duro defendants' failure to make a prima facie showing of entitlement to judgment as a matter of law requires the denial of the motion, regardless of the sufficiency of North River's opposition papers.


The Supreme Court properly denied that branch of North River's cross motion which was for summary judgment declaring that the Duro defendants are immediately required to contribute to their own defense costs in the underlying litigation for periods that they lacked insurance. It was not clear that there were “occurrences” in the non-covered periods.


Duro incorrectly contended that they should not be required to contribute to their defense for the periods that they were uninsured on the ground that the insurance carriers who are parties to this appeal effectively waived any claim for contribution of defense costs from Duro by paying those costs in full for 20 years. As early as 1990, several insurers contended that Duro should ratably contribute so there was no waiver or estoppel.


08/22/17       The Burlington Insurance Company v. NYC Transit Authority

Appellate Division, First Department

Burlington II – Burlington Can Recover the Money Paid in Settlement of the Underlying Claim, Despite Several Arguments in Opposition

After the Court of Appeals reversed the First Departments order in this case, finding that there needed to be a finding of proximate cause in order for an additional insured provision to be triggered, sought reimbursement of monies paid to settle the underlying lawsuit.  Burlington paid $950,000 payment.


NYC Transit Authority (“City”) claimed that the payment was voluntary and thus the carrier could not seek reimbursement.


Burlington had withdrawn its reservation of rights based on the NYC’s threat to

withhold payments under the contract with Burlington’s named insured, Breaking Solutions unless plaintiff defended and indemnified the City "without reservation."


The First Department held that the settlement payment cannot be said to have been voluntary, and an unjust windfall would result if NYCTA, having forced plaintiff to withdraw its reservation to coverage with respect to the City, NYCTA's contractual indemnitee, were then permitted to refuse to honor its own contractual indemnification obligations to the City.


The City then argued that it was prejudiced because Burlington controlled its defense. However, the disclaimer predated the commencement of the defense and NYCTA failed to demonstrate any change in position resulting from the alleged prejudice.


Equally unavailing is NYCTA's argument that because Burlington waited until the conclusion of fact discovery in the underlying action before issuing its disclaimer, plaintiff is now estopped from denying it indemnity coverage. Since the Court of Appeals has determined that NYCTA was not an additional insured under the endorsement, however, plaintiff was not required to disclaim coverage.


Anti-subrogation arguments are not applicable because the City is not an insured under the Burlington policy.


08/16/17       DeLuca v. RLI Insurance Company

Appellate Division, Second Department

Carrier Fails to Demonstrate a Lack of Cooperation on the Part of Its Insured, Failing to Justify Disclaimer

DeLuca secured judgment against ML Specialty (“ML”), insured by RLI.  DeLuca had claimed that ML performed faulty construction work on a neighboring property and damaged DeLuca’s property.  ML had notified RLI of the plaintiff's claim and RLI had retained counsel to defend ML in the underlying action.


RLI claimed that after cooperating with counsel for approximately five years of litigation, including appearing for a deposition, ML stopped cooperating.  RLI disclaimed on that basis and ML’s counsel withdrew from the case.


Thereafter, ML defaulted in the underlying action, and DeLuca obtained a judgment against ML. DeLuca then commenced this direct action seeking a judgment declaring that the RLI was obligated to pay her damages in connection with the judgment.


An insurer who seeks to disclaim coverage on the ground of noncooperation is required to demonstrate that (1) it acted diligently in seeking to bring about the insured's cooperation, (2) its efforts were reasonably calculated to obtain the insured's cooperation, and (3) the attitude of the insured, after its cooperation was sought, was one of willful and avowed obstruction.  Mere efforts by the insurer and mere inaction on the part of the insured, without more, are insufficient to establish non-cooperation.


Here, RLI failed to demonstrate ML noncooperation. It failed to submit proof in admissible form. The principal proof that RLI submitted was letters from the attorneys then defending ML and investigation reports and emails from a company hired by the defendant to perform investigation services. The letters, reports, and emails set forth statements allegedly made by ML’s president, which the RLI contended demonstrates ML's unwillingness to cooperate.


The letters and investigation reports themselves, reporting that the statements were made by ML's president and reciting their content, are offered for their truth, and therefore constitute hearsay. Accordingly, this evidence was not in admissible form.


The affidavit from the president of the investigation company, which contains a conclusory assertion that its efforts to obtain ML’s cooperation were unsuccessful, was insufficient to meet the "heavy burden" of demonstrating noncooperation.

Editor’s Note:  Denying coverage based on a failure to cooperate is a difficult task, indeed.  Letting a default be entered is a risky proposition.  We would suggest that a wiser course of action, rather than walking away from coverage and allowing a default to be entered, would have been to commence a Declaratory Judgment Action while continuing to defend the insured.  Case law dictates that a motion to withdraw as counsel is not the acceptable way to test an insurer’s right to disclaim.  [Brothers v. Burt, 27 NY2d 905 (1970)]



Robert E.B. Hewitt III

[email protected]


08/23/17       Cho v. Michelengeli

Appellate Division, Second Department

Plaintiff Raised an Issue of Fact Fulfilling Its Burden Once Defendant Demonstrated a Prima Facie Entitlement to Summary Judgment

The defendant met his prima facie burden of showing that neither of the plaintiffs sustained a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. The defendant submitted competent medical evidence establishing, prima facie, that the alleged injuries to the plaintiff Alex Cho's right shoulder and the plaintiff Jun Hyun Cho's left knee did not constitute serious injuries under either the permanent consequential limitation of use or significant limitation of use categories of Insurance Law § 5102(d). In opposition, the plaintiffs raised a triable issue of fact as to whether Alex Cho sustained a serious injury to his right shoulder under the permanent consequential limitation of use and significant limitation of use categories of Insurance Law § 5102(d). However, the plaintiffs failed to raise a triable issue of fact as to whether Jun Hyun Cho sustained a serious injury to his left knee within the meaning of Insurance Law § 5102(d). No facts were given,


08/23/17       Kisiletskiy  v. Pena

Appellate Division, Second Department

Plaintiff’s Counsel’s Law Office Failure to Submit Opposition Papers Deemed Insufficient Excuse by Appellate Division

In November 2010, the plaintiff commenced this action to recover damages for personal injuries allegedly sustained by him in a motor vehicle accident. By notice of motion dated March 26, 2012, the defendants moved for summary judgment dismissing the complaint on the ground that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. During oral argument on the motion, the plaintiff's counsel requested an adjournment of the motion for the purpose of submitting opposition papers, and the Supreme Court denied the request. In an order dated August 10, 2012, the court granted the defendants' unopposed motion for summary judgment dismissing the complaint. In August 2014, the plaintiff moved pursuant to CPLR 5015(a) to vacate the order granting summary judgment. In the order appealed from, the court denied the plaintiff's motion to vacate. In seeking to vacate the order dated August 10, 2012, the plaintiff was required to demonstrate both a reasonable excuse for his default in opposing the defendants' motion for summary judgment and a potentially meritorious opposition to the motion The plaintiff did not demonstrate a reasonable excuse for his default. In effect, his counsel asserted law office failure. However, the alleged law office failure pertained to a matter unrelated to the plaintiff's failure to submit opposition papers to the defendants' motion for summary judgment. Since the plaintiff failed to demonstrate a reasonable excuse for his default, it was unnecessary to determine whether he demonstrated a potentially meritorious opposition to the defendants' motion. Thus the merits of the serious injury issue were never reached.


08/16/17       Castro v. Anthony

Appellate Division, Second Department

Defendant’s Own Expert Found Unexplained Range of Motion Limitations

The defendants failed to meet their prima facie burden of showing that the plaintiff did not sustain a serious injury within the meaning of Insurance Law § 5102(d) as a result of the subject accident. One of the defendants' experts found significant limitations in the range of motion of the plaintiff's spine, and the expert failed to adequately explain and substantiate his belief that the limitations were self-imposed. Since the defendants failed to meet their prima facie burden, it is unnecessary to determine whether the papers submitted by the plaintiff in opposition were sufficient to raise a triable issue of fact.



Tessa R. Scott

[email protected]




08/11/17       Renelique v American Tr. Ins. Co.

Appellate Term, Second Department

Where there is Evidence that Plaintiff had Mailed the Requested Verification, Summary Judgment was not Appropriate

In this action plaintiff appeals from an order of the Civil Court which granted defendant's motion dismissing the complaint on the ground that the action was premature because plaintiff had failed to provide requested verification.

Contrary to plaintiff's contention, defendant demonstrated that it had not received the requested verification and, thus, that plaintiff's action is premature. However, as plaintiff further argues, the affidavit submitted by plaintiff in opposition to defendant's motion was sufficient to give rise to a presumption that the requested verification had been mailed to, and received by, defendant. In view of the foregoing, there is a triable issue of fact as to whether this action is premature.

Accordingly, the order was reversed and defendant's motion for summary judgment dismissing the complaint is denied.


08/11/17       Vladenn Med. Supply Corp. v United Servs. Auto. Assn

Appellate Term, Second Department

It Goes Without Saying that Parties Must Comply with Discovery Rules and Orders of the Court

In this action by a provider to recover assigned first-party no-fault benefits, the Civil Court, by order dated March 25, 2014, directed plaintiff to respond to certain of defendant's discovery demands within 60 days of the order. Subsequently, Plaintiff did not provide discovery as directed by the Court’s Order.  As a result, Defendant moved to dismiss the complaint or compel plaintiff to compel with the previous Order.


The Civil Court granted defendant's subsequent motion to dismiss the complaint for plaintiff's failure to comply with the Order, or, in the alternative, to compel plaintiff to comply with that Order, to the extent of directing plaintiff to comply within 10 days, and providing that "[f]ailure to comply will result in the striking of Plaintiff's pleadings and [a] sanction of counsel fees [to] defendant of $2,500."


That Order was appealed from.  The Second Department, after reviewing the record modified the Order of the lower Court.  The Second Department reduced the amount of the conditional award of counsel fees to the sum of $1,000.  Further, it upheld the dismissal of Plaintiff’s Complaint.



Steven E. Peiper

[email protected]


08/23/17       Burlington Ins. Co. v Aisyrk Co., Inc.

Appellate Division, Second Department

Motion for Corporate Default Fails were CPLR 3215(g)’s Subsequent Service Requirement is not Satisfied

Plaintiff commenced this action seeking to recover unpaid premiums, which were owed by defendant.  Prior to commencing the instant action under the Debtor and Creditor Law, Burlington had sought, and obtained, a judgment against the defendant for the sum of $118,198.06. 


Defendant was served, via BCL 206 on November 4, 2015. In addition, defendant’s principal, Reczko, was personally served at his New Jersey residence on December 22, 2015.  Importantly, it appears that Mr. Reczko was also named as a defendant in this action


When defendants did not appear, Burlington eventually moved for a default judgment against Aisyrk.  While they established proper service, Burlington could not show that it complied with CPLR 3215(g)(4)(i). Accordingly, it did not meet its burden and the motion was denied.  


In opposition, Burlington argued that the personal service upon Mr. Reczko satisfied its obligations.  The Court obviously disagreed. 


Peiper’s PointCPLR 3215(g)(4) requires, in essence, a subsequent service of the Summons and Complaint, via letter.  Without it, as the plaintiff found here, any motion for a default is procedurally defective. 




Agnes A. Wilewicz

[email protected]


All’s Quiet on the Second Circuit front.



Jennifer A. Ehman

[email protected]

08/09/17       Indian Harbor Insurance Company v. Alma Tower, LLC

Supreme Court, New York County

New York County Trial Court holds that Despite the Recent Court of Appeals Decision, Burlington Insurance Company v. NYC Transit Authority, an Insurer is Still Obligated to Defend Where There is a “Reasonable Possibility” of Coverage for the Named Insured’s Acts or Omission

Indian Harbor Insurance Company (“Indian”) commenced this declaratory judgment action against Alma Tower, LLC (“Alma”) and Vordonia Contracting and Supplies Corp. (“Vordonia”).  The action arose out of an underlying lawsuit commenced against Alma and Vordonia by an injured plaintiff who alleged that he sustained injury while working in the course of employment with S&S HVAC (“S&S”) on a construction project (“Project”).


Alma owned the premises where the Project had been ongoing. Vordonia was the Project’s general contractor and S&S was a subcontractor. Indian sought a declaration that Alma and Vordonia were not entitled to a defense and indemnification costs as additional insureds under the relevant insurance policy it had issued to S&S (“Policy”).


Alma and Vordonia sought summary judgment of the action, arguing that Indian’s Complaint should be dismissed because it was obligated to defend and reimburse them for the costs of the underlying actions.  Contemporaneous to this motion, and subsequent to oral argument, the Court of Appeals handed down its Burlington Insurance Company v. NYC Transit Authority decision.  According to the court in Burlington, which considered the same additional insured endorsement, for the duty to indemnify to be triggered, the named insured’s acts or omissions must have been a proximately cause of the alleged accident.


For a reason not stated in the decision, Alma and Vordonia withdrew a separate motion for summary judgment regarding Indian’s duty to indemnify. Thus, the issue remaining was Indian’s obligation to pay for their defense costs.


In considering the Policy’s additional insured endorsement, the court found the language unambiguous, and afforded it its plain and ordinary meaning.  The Policy granted additional insured coverage to the Moving Defendants pursuant to “(i) the contract between the Moving Defendants and S&S, and (ii) when Claimant’s alleged injuries were “caused, in whole or in part, by” S&S’s acts or omissions in the performance of S&S’s ongoing operations for the Project.”


The court framed its analysis through the “exceedingly” broad lens customarily associated with duty to defend cases. Such a duty is determined by comparing the policy language against any underlying allegations. An insurer is required to provide a defense where the underlying allegation suggests that there is a “reasonable possibility” of coverage.  An insurer with knowledge of facts that potentially bring a claim within a policy’s indemnity coverage has a duty to defend an insured.


Citing Burlington, the court acknowledged that “[w]here an insurance policy is restricted to liability for any bodily injury ‘caused, in whole or in part’ by the ‘acts or omissions’ of the named insured, the coverage applies to injury proximately caused by the named insured.” However, the court, citing the Court of Appeals’ earlier decision in Regal Construction Corporation, continued by adding that “[w]hen an employee of the named insured is injured while in the employ of the named insured, the additional insured is entitled to defense because there is a reasonable possibility that the bodily injury is proximately caused by the named insured’s acts or omissions.”


The court was satisfied that Alma and Vordonia had met their prima facie burden, establishing Indian’s duty to defend and reimburse them as additional insureds, where the court determined that it was “reasonably possible” that the injured plaintiff’s alleged accident occurred while working on the Project it in turn was proximately caused by welding directions given to him by his supervisor.


The court was unpersuaded by Indian’s contention that the Policy’s “Ground Up Exclusion” created an outstanding issue of fact. The court reasoned that, pursuant to Insurance Law § 3420(d), Indian had failed to timely disclaim coverage after first learning of the grounds for disclaimer of liability or denial of coverage.  Indian, despite sending a reservation of rights letter dated April 5, 2013, had not used “sufficiently definite language” to disclaim coverage, amounting to more than a seventeen month delay in disclaiming coverage under the “Ground Up Exclusion”. Therefore, the untimely disclaimer was insufficient to raise any issue of fact to deny summary judgment.


Accordingly, the court found that the Indian Policy was primary, requiring no contribution from the Alma and Vordonia’s insurer.


Lastly, the court declined to grant Indian’s cross-motion for a stay, because an insurer is required to at least defend the insured while awaiting a judicial determination regarding its ability to rescind a policy.

Note:  Special thanks to Ryan Maxwell, a Hurwitz & Fine law clerk, for writing this one up for us.   For a copy of this yet reported decision, send me a note at [email protected].



Brian D. Barnas

[email protected]


08/22/17       Raschkovsky v. Allstate Insurance Company

United States Court of Appeals, Ninth Circuit

First Party Bad Faith Claim Survives Summary Judgment after Breach of Contract Claim was Reinstated

On September 30, 2013 Plaintiff called Allstate to report water damage that she had discovered in the guest bathroom four days earlier.  Plumbers from Plaintiff’s home warranty examined the damage as did a public adjuster.  On November 14, 2013, a mitigation company inspection the damage, prepared an estimate, and took photographs.  Allstate’s adjuster inspected the premises on November 21, 2013, but the adjuster could not perform a full investigation because mitigation services had commenced and the entire area was sealed off.  The home was inspected again on March 6, 2014 by a new adjuster.  On March 28, 2014, Allstate denied coverage based on an exclusion for continuous or repeated seepage or leakage over a period of weeks, months, or years.


Plaintiff’s brought a claim against Allstate for breach of contract and bad faith.  The court below concluded that there was not sufficient evidence from which a reasonable jury could find that the water damage resulted from a sudden or accidental discharge.  Therefore, Plaintiff’s breach of contract claim was dismissed.  The bad faith claim was also dismissed based on the lack of coverage under the policy.


On appeal, the Ninth Circuit concluded that the breach of contract and bad faith claims should not have been dismissed on summary judgment.  There was an issue of fact as to whether the leak in question was “sudden and accidental,” and whether any of the policy exclusions applied.


Turning to the bad faith claim, the Ninth Circuit concluded that there was an issue of fact as to whether Allstate acted unreasonably or without proper cause.  A reasonable jury could find that Allstate was not pursuing the adjustment of the claim with any degree of diligence and that Allstate did not thoroughly investigate the circumstances to determine if the claim was covered.


08/15/17       Dziadek v. The Charter Oak Fire Insurance Company

United States Court of Appeals, Eighth Circuit

Insurer who Failed to Advise the Injured Plaintiff of Underinsured Coverage was found to have Committed Deceit and had to Pay $2.75 Million in Punitive Damages

Charter Oak issued a Commercial Insurance Policy to Billion Empire Motors, Inc., an auto dealership in Sioux Falls.  Billion loaned a car to Lori Peterson.  On September 22, 2008, Peterson lost control of the car, crashing in a ravine.  Laura Dziadek, a passenger, was severely injured.  She hired Zimmer Duncan & Cole (ZDC) to represent her.


In early 2009, Billion’s insurance agent notified Charter Oak about the accident.  Charter’s representative learned that Peterson was insured by Progressive but only for $100,000 in liability coverage.  On February 6, Charter’s representative spoke with ZDC attorney Jeffery A. Cole about coverage for Dziadek.  According to Cole, she said Dziadek had no coverage under the Charter Policy.  Days later, she wrote Cole a letter stating “no coverage for your client [Dziadek] exists under this policy.”


On February 18, Cole sent a letter requesting the declaration sheet and “a true and correct copy” of the Policy.  The declarations sheet and excerpts of the Policy were sent back, but not the entire Policy.  In the excerpts sent, it was not apparent that Dziadek was an insured.


On February 24, Progressive offered Peterson’s $100,000 limit in exchange for a full release from Dziadek.  Cole declined because Dziadek’s medical bills exceeded $100,000 and he hoped to collect more from Peterson and other alleged tortfeasors.


In June 2011, ZDC attorney Daniel K. Brendtro reviewed the Charter Policy to see if Dziadek was covered.  He noticed the UIM coverage and told a paralegal to get a copy of the entire Policy.  In response, Charter’s representative asked the paralegal to request specific parts of the Policy, asserting it could be over 2,000 pages.  The paralegal narrowed the request but received no response.  The following week, the paralegal repeated the request.  On July 21, a full copy of the Policy was sent.


After reviewing the entire Policy, ZDC wrote seeking confirmation that Dziadek was an insured with UIM coverage.  After 50 days with no response, Dziadek filed a lawsuit September 2011, alleging breach of contract, deceit, and bad faith.  Charter Oak’s answer admitted the existence of UIM and medical payments coverage.  Charter Oak also agreed to Dziadek’s settlement with Peterson and Progressive for the $100,000 limit.  On February 21, 2012, Charter Oak paid $900,000 in UIM coverage (the $1 million limit minus $100,000 from the Progressive policy), plus $5,000 in medical-payments coverage.


The jury found Charter Oak liable for deceit and breach of contract.  It awarded Dziadek $250,000 for additional legal fees and $2.75 million in punitive damages.


On appeal the Eighth Circuit affirmed the jury’s finding that Charter committed the tort of deceit.  ZDC asked whether any coverage existed and was told no.  ZDC twice asked for the entire policy, but the representative refused first sending excerpts where Dziadek was not an insured and then claiming the policy could be over 2,000 pages when it was actually 200.  Charter Oak did not simply fail to disclose the existence of coverage, it actively deceived Dziadek and her attorney into believing there was no coverage.


Charter Oak argued that it owed Dziadek no independent duty apart from the contract, and thus the tort of deceit should not be available.  It also argued that bad faith was the only extra-contractual remedy available.  This argument was rejected.  The court concluded that the tort of deceit is also a viable claim against an insurance company resulting from a breach of contract, in addition to bad faith.


Charter Oak also argued that there was no harm because the jury awarded the attorney’s fees that Dziadek would have saved if it had not deceived her.  However, Cole testified that he would have only charged her $10,000 to submit an UIM claim if the existence of coverage had been disclosed in 2009.  Instead, he had charged her 1/3 of the total recovery.


The Eighth Circuit also confirmed that Charter Oak breached the insurance contract.  The company contributed materially to her failure to formalize her claim in 2009.  Charter Oak’s argument that there was no breach because Dziadek could not have formalized her claim until 2011 was rejected.  She did not need to wait until resolution of claims against all other non-motorist tortfeasors to formalize the UIM claim.


Ultimately the court concluded that the jury below reasonably could have concluded that Charter Oak willfully misled the plaintiff about the existence of UIM coverage with the intent to avoid having to pay the $900,000.


The court also affirmed the award of punitive damages.  The same evidence that supported the deceit claim supported Dziadek’s entitlement to punitive damages.  The court also found that the award of $2.75 million was not excessive.


John R. Ewell

[email protected]


08/11/17       State of Vermont v. Blake

Vermont Supreme Court

Release Signed by Insurer in the Civil Action Did Not Preclude Court from Ordering Insured to Pay Restitution to His Insurer in Related Criminal Proceeding

In 2009, Randell Blake was convicted of filing a false insurance claim in connection with a fire at his house that occurred in August of 2007. Subsequent to his criminal convictions, the State of Vermont pursued this restitution claim against Blake. The trial court ordered Blake to pay restitution to his insurer, Safeco Insurance Company of America (Safeco), in the amount of $115,994.74. Blake appealed the trial court’s restitution order, arguing that the order should be vacated because a general release, signed by Safeco in a related civil case, relieved him of any duty to pay it restitution.


Prior to his convictions, Safeco made several payments to Blake under the terms of defendant’s homeowner’s insurance policy. Safeco paid Blake’s temporary living expenses, paid the outstanding balance of Blake’s mortgage on the house, and paid for the demolition of the house and debris removal.


In 2008, after Safeco had issued several insurance payments, Blake initiated a civil suit against Safeco seeking additional insurance payments from the fire loss and Safeco counterclaimed. The parties resolved the civil suit by exchanging mutual releases. The general release that Safeco signed states in relevant part that Safeco releases Blake from “any and all manner of action and actions, cause and causes of action, suits, damages, judgments, executions, claims for personal injuries, property damage and demands whatsoever” that Safeco “can, shall, or may have against [Blake].”


At the trial court level, Blake contested the State’s claim for restitution, arguing he did not owe restitution to Safeco in light of the exchanged releases. Blake filed a motion to “strike Safeco’s right to restitution”, which the trial court denied based upon the court’s statutory duty to consider restitution.


On appeal to the Vermont Supreme Court, Blake argued that the restitution order should be vacated claiming that Safeco’s general release relieved him of any further liability, including restitution in this related criminal proceeding. Neither party disputed that Safeco is a victim of Blake’s fraudulent insurance claim. The issue, considered by Vermont’s high court, was whether a general release of civil claims binds a criminal court in its duty to “consider” restitution.


Vermont law requires the courts to “consider” whether restitution should be ordered in any case where the victim of a crime suffers an insured property loss. Blake argued that the court fulfills its statutory duty to “consider” restitution if the court inquires into restitution and, upon learning of a release, finds any further claim to be barred.


Notably, “consider” is not defined in the statute. In order to interpret the statute’s use of the word, “consider,” the Court looked to its plain and ordinary meaning. According to Merriam-Webster, “consider means “to think about carefully or to think of especially with regard to taking some action.” The Court viewed this definition as implying that to “consider” requires the court to do more than give some thought to the matter of restitution. However, that did not answer the question of what “consider” means in the context of the restitution statute. The Court next “considered” the context of the restitution statute to ascertain legislative intent behind the statute.


Looking at the restitution statute in context clarified for the Court what it means to “consider”. The Court determined that this meant that “once a court, exercising its reasonable discretion, finds that restitution is necessary, it must impose restitution.” The Court further reasoned that only the court has the power to decide whether to order restitution. Rejecting Blake’s argument, the Court held that “it was never Safeco’s right to waive restitution in connection with the criminal proceeding.” The Court explained that:


Restitution and civil damages originate within separate systems, are not substitutes for each other, and a civil court’s award of damages to a plaintiff does not discharge the criminal court’s duty or authority to consider and order restitution. Therefore, a civil release has no bearing on the criminal court’s duty and authority regarding restitution either. Reflected in this conclusion is the recognition that restitution, unlike civil damages, is not purely aimed at making the victim whole, but also involves additional functions of the criminal justice system such as rehabilitation and deterrence.


The Vermont judiciary supported its reasons noting that their view aligned with how the vast majority of other states have interpreted their restitution statutes.


Accordingly, the exchange of releases in the civil suit only extinguished the competing civil claims. The release Safeco signed did not preclude an order of restitution in the related criminal proceeding. The Vermont Supreme Court remanded the case back to the trial court to determine Blake’s ability to pay restitution to Safeco.



Howard B. Altman

[email protected]


Circular Letter: Anti-Discrimination -- Transgender


New York’s Department of Financial Services issued a Circular Letter on August 12, 2017, seeking to prevent health and accident insurers from discriminating against transgender individuals when processing claims.   The Letter may be viewed in full at:


The letter is directed to ”all Insurers authorized to write accident and health Insurance in New York State, Article 43 Corporations, Health Maintenance Organizations (“HMOs”), Student Health Plans …and Municipal Cooperative Health Benefit Plans and cites Ins. Law §§ 3224 and 3224-a; and 45 C.F.R. § 92.206.”


DFS’s letter advises that it seeks “to provide guidance to insurers authorized to write accident and health insurance in New York State…related to covering health services provided to transgender individuals”, and seeks to curb the potential practice of " denying claims of transgender individuals because the gender with which the individual identifies does not match the gender of someone to whom those services are typically provided.” The letter cites as examples denying a claim by a female who identifies as a male for cervical cytology screening because the issuer’s information indicates that the insured is anatomically a male, or denying a claim of male who identifies as a female for prostate cancer screening because the issuer’s information indicates that the insured is anatomically a female. Other examples may arise where a policyholder undergoes a sex change operation after applying for the policy.   The letter provides:


Ins. Law § 3224(a) requires the Superintendent to establish standard accident and health insurance claim forms for the services of hospitals, physicians and other health care providers.  Section 3224(b) provides that the adoption of any uniform claim form by the Superintendent does not preclude an insurer from obtaining any necessary information regarding a claim from the claimant, provider of health care or treatment, or certifier of coverage.


Ins. Law § 3224-a sets forth the standards for prompt, fair and equitable settlement of claims for health care and payments for health care services.  Section 3224-a(b) permits an issuer to request additional information if the obligation of the issuer to pay the claim is not reasonably clear due to a good faith dispute regarding the eligibility of the insured for coverage, the liability of another insurer or corporation or organization for all or part of the claim, the amount of the claim, the benefits covered under the contract or agreement, or the manner in which services were accessed or provided.


By explicitly providing the right of the issuer to request additional information, both sections of the Insurance Law referred to above are intended to ensure that an issuer does not deny a claim because it does not have sufficient information to pay the claim.  Transgender persons should not be discriminated against because of their transgender status nor denied coverage for treatment because of coding issues.  As such, an issuer who receives a claim from an insured of one gender or sex for a service that is typically or exclusively provided to an individual of another gender or sex should take reasonable steps, including requesting additional information, to determine whether the insured is eligible for the services prior to denying the claim.


Additionally, when processing claims for health services provided to transgender individuals, issuers should consider 45 C.F.R § 92.206, which provides in relevant part that “a covered entity shall treat individuals consistent with their gender identity, except that a covered entity may not deny or limit health services that are ordinarily or exclusively available to individuals of one sex, to a transgender individual based on the fact that the individual’s sex assigned at birth, gender identity, or gender otherwise recorded is different from the one to which such health services are ordinarily or exclusively available.”


In order to ensure that transgender individuals are able to access covered services, an issuer should not deny a claim for a health service provided to an individual because the individual is seemingly not of the gender to whom the service is typically or exclusively provided without seeking additional information to determine whether the service was appropriately provided to the individual.


* * *


The Circular Letter closes by directing inquiries regarding the letter to Thomas Fusco, Supervising Insurance Attorney, Health Bureau, New York State Department of Financial Services, Walter J. Mahoney Office Building, 65 Court Street, Room 7, Buffalo, New York 14202 or by e-mail at [email protected].


The Circular Letter may be a tacit response to the President’s recent plan to bar transgender persons from serving in the Armed Forces because of the alleged medical costs associated with treating transgender persons. However, CBO and other budgetary reviews have refuted the belief that medical treatment for transgender persons differs from those of the rest of the population.  This may well be New York’s attempt to ensure that all of its residents are treated equally in terms of health coverage and thus the availability of medical care.  Carriers thus must use care in processing claims to assure equal application of policy terms among all policyholders. 


Brian F. Mark
[email protected]


No cases to report.



Earl K. Cantwell
[email protected]


06/12/17       Henson v. Santander Consumer USA Inc.

United States Supreme Court   

Debt Buyers are not “Debt Collectors” under the FDCPA

Many insurance companies, directly or indirectly, insure activities of businesses involved in the debt collection business.  There are many bases for claims in federal court under the Fair Debt Collection Practices Act (“FDCPA”), as well as instances of complaints to regulatory authorities, and sometimes even large-scale class actions.  Therefore, any limitation on the amount and scope of liability under the FDCPA should be a welcome respite for the risk management industry.


The United States Supreme Court recently issued a decision that may well ameliorate and certainly modify liabilities under the FDCPA in the case of Henson v. Santander Consumer USA Inc., 2017 WL 2507342 (June 12, 2017).  The essential holding in Henson was that, if a company attempts to collect debts that it purchased or acquired for its own account, they are not a “debt collector” under the statutory definition of the FDCPA. 


Under the FDCPA, “debt collectors” are defined as anyone who regularly collects or attempts to collect debts owed or due to another.  15 U.S.C. §1692 a(6).  The issue in Henson was whether consumer finance firms and banks that purchase consumer debt are included within this statutory definition.  The federal courts were divided on this issue, and the Supreme Court resolved this split in authority and held that debt buyers attempting to collect on their own debt are excluded from the FDCPA because they do not qualify as “debt collectors” as defined. 


In this case, the District Court and the Fourth Circuit had ruled in favor of Santander on the ground that it did not qualify as a debt collector because it did not regularly seek to collect debts owed to another.  Rather, it was seeking to collect debts it purchased and owned in its own account/financial portfolio.  The Court’s decision was based upon the statutory definition, and because the FDCPA language and background focuses on third party debt collection agents. 


This decision has broad implications in the financial services and debt collection industry.  It provides defense to companies who purchase financial accounts and debt of various amounts and quality, and then seek to collect on it.  This decision does severely weaken and limit the reach of the FDCPA, and one question is whether in the current political climate Congress will attempt to amend and broaden the statute. 


In short, the Henson decision clarifies that purchasers of various consumer debt and accounts face far less regulation and restrictions under the FDCPA in their collection efforts and activities.  As stated, this will also benefit the risk management industry which very often is involved in defending and potentially indemnifying such claims under errors and omissions policies, business practice policies, and other liability insurance coverage. 


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